Monday, July 04, 2011

Over at the C-SPAN BookTV website, I was watching former Lehman Brothers VP, Lawrence McDonald, present his book "A Colossal Failure of Common Sense: The Inside Story of the Collapse of Lehman Brothers," and I thought his message about silence among the Lehman board and those with access to the firm's 31st floor executive lair offered a microcosm of what ails the American nation. This shout-out on the 4th of July is rightly timed due, then.

Along these lines, if I were in the audience during McDonald's presentation, my question to him might have been, "Could you provide some insight on the dynamic connecting reckless leadership in the nation's largest banks with a reckless body politic? Some enlightenment on the man Henry Paulson in this context — unquestionably relevant to your story — might prove instructive, as well."

Then, moving to the matter of leverage I would ask, "Given the obscene degree to which leverage was added not only at Lehman, but throughout the entire trans-Atlantic financial system, is it not likely that, industry consolidation accelerated in 2008 might proceed with, say, Morgan Stanley being reabsorbed back into JP Morgan Chase, with the combined enterprise then being poised to destroy Goldman Sachs? In other words, with the means having been made available allowing leverage to reach obscene levels, and this now being defended with vigor by lenders of last resort, is it reasonable to think the aim all along, and continuing, is the very consolidation of financial power making Lehman Brothers but among the first victims?"

(This, too, is to ponder whether the widely bemoaned connection between Goldman Sachs and Washington is but a trap venturing to destroy both. And please spare me the "I don't buy conspiracy theories" line, as this is American Independence Day, which was from the first a conspiracy, indeed.)

Goldman Sachs

Morgan Stanley

JP Morgan Chase

Relatively speaking, Morgan Stanley appears judged by a consensus most vulnerable of the three, so the order of prospective industry consolidation finds agreement in perception displayed by share price behavior in relation to respective 200-day moving averages. Pressure on these firms presently — falling share prices uniformly turning relative strength decidedly negative (but not yet extremely so, as would reflect an irrational selling contingent) — suggests risk of a further contraction in leverage throughout the trans-Atlantic soon might occasion another round of chaotic consolidation among leading financial firms, this in keeping with my second fantasy question to Lawrence McDonald.

The internet being the greatest invention since Gutenberg's printing press, I will tweet him, begging his brief, and hopefully provocative reply to this, the matter of systemic leverage now backstopped by lenders of last resort to the tune of tens-of-trillions of dollars (that, today, trouble in the euro-zone but shows woefully inadequate), and whether silence among elected representatives in the face of the Fed's failed Maiden Lane II auction, much like silence at Lehman Brothers, might rightly be feared these days portending the same end to the United States as came to that firm.

If you have not read Lawrence McDonald's "A Colossal Failure of Common Sense: The Inside Story of the Collapse of Lehman Brothers," co-authored with colorful ghost writer, Patrick Robinson, by all means, purchase the book from Amazon.com via my affiliate link below, and kill two birds with one stone: summer reading for you and a dime for me, this in appreciation for killer content.

(Being Independence Day, this American will not shun promoting his cause doubly, as this too, as always, is for our mutual gratification...)

Might as well get that Kindle, too, because bound books or soooo 20th century!

Lawrence? Comments? Being opposed to bailout, like you, there's just one thing left to do...

Analysis centers on the stock market's path of least resistance. Long-term, this drives a simple strategy for safely investing a 401(k) for maximum profit. Intermediate-term, investing with stock index tracking-ETFs (both their long and short varieties) is advanced. Short-term, stock index options occasionally offer extraordinary profit opportunities when the stock market is moving along its projected path.

Nothing is set in stone. Nor is the stock market's path of least resistance always known. More often than not, there are no stock index option positions recommended.

Be Strong

Matthew 24:13

Get Real-Time Trade Notification

Make More Money Right Now

If your idea of investing generally is about making more money as safely as possible, then you appreciate how time is of the essence.

That's why you fear risk in the stock market and loathe the threat of suffering steep losses ... because you only have so much time to enjoy the fruits of your investments.

So, becoming a master at weighing opportunity and risk in the stock market, you discover how to profit no matter which way the wind blows.

Demanding greater analytical clarity, you raise your capacity to safely make more money. With keener command over forecasting you can confidently trade leveraged ETFs as well as stock index options, because you discover there indeed is simple discipline to knowing up from down with a reasonable degree of certainty.Watch me trade ETFs effortlessly and in slow motion.

Receive first alert when small fortunes look to be made over a short matter of weeks trading stock index options.Get notified whenever I am stalking a double or triple ROI options opportunity.

Elevate your discipline and harness your power to make more money right now.